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"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice" - Adam Smith

The NHS is failing us

Written by Daniel Pycock | Friday 09 September 2011

nhsMost in Britain dislike American healthcare. And rightly so, since the US insurance system is a cartel protected by government legislation. However, that shouldn’t make us want to defend Britain’s Soviet-style healthcare either. Both systems are bad.

You can check out the OECD statistics here. Britain's relatively poor cancer survival rates are of particular concern. The UK ranks 12th (and well below the OECD average) for bowel and breast cancer survival, despite a tripling the NHS budget for these services over 12 years. The ASI produced a good report on this earlier this year.

The problem isn’t finance (per-capita NHS spending is considerably above the OECD average), but the politically charged nature of the NHS, and therefore the inability to remove planners and reform provision. Figures for 2007-2011 show that the NHS spent more on “media professionals” (i.e. spin-doctors) than on cancer specialists. Yet pointing this out – as Daniel Hannan did – puts you beyond the pale of dialogue. The NHS’ failures on cancer included a shortage of oncologists, a lack of MRI scanners and an inability to provide cancer drugs. The basic functions of business (recruitment, procurement and provision) are poorly performed by the state.

This also explains the postcode lottery, where some hospitals (apparently) can provide Kremlin clinic standards, whilst many other hospitals resemble MRSA infested cesspits of pebble-dashed, post-war brutalist architecture. The NHS’s futuristic IT project is a categorical failure, having wasted more than £2.7 billion of taxpayers’ money. Moreover, the NHS’s rebuilding projects (using PFI money) may become obsolete through overcapacity, as recently revealed.

From 1999 to 2004, the government doubled GPs' pay . The Sunday Times reported that after a three-year contract (2004 - 2007) increasing pay by 25%, GPs worked 15% less and 33% worked part-time.

These oft’ repeated arguments don’t include the massive oversupplies of Tamiflu (based on public hysteria rather than medical evidence), or the inability to clean hospitals (as shown by MRSA outbreaks), or declining standards in nursing and elderly care, or even the extent to which unnecessary procedures are funded by the taxpayer...

It’s pretty clear that the NHS is failing. It’s funded by a damaging taxes on work and operated according to centrally determined targets. There’s no reason why the UK can’t have privately run hospitals funded by a truly competitive insurance market. It would almost certainly deliver a more efficient and comprehensive health system, and it needn’t challenge the universal access that so many people value. It's the ends that matter, not the means.

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The NHS is failing us

Written by Daniel Pycock | Friday 09 September 2011

nhsMost in Britain dislike American healthcare. And rightly so, since the US insurance system is a cartel protected by government legislation. However, that shouldn’t make us want to defend Britain’s Soviet-style healthcare either. Both systems are bad.

You can check out the OECD statistics here. Britain's relatively poor cancer survival rates are of particular concern. The UK ranks 12th (and well below the OECD average) for bowel and breast cancer survival, despite a tripling the NHS budget for these services over 12 years. The ASI produced a good report on this earlier this year.

The problem isn’t finance (per-capita NHS spending is considerably above the OECD average), but the politically charged nature of the NHS, and therefore the inability to remove planners and reform provision. Figures for 2007-2011 show that the NHS spent more on “media professionals” (i.e. spin-doctors) than on cancer specialists. Yet pointing this out – as Daniel Hannan did – puts you beyond the pale of dialogue. The NHS’ failures on cancer included a shortage of oncologists, a lack of MRI scanners and an inability to provide cancer drugs. The basic functions of business (recruitment, procurement and provision) are poorly performed by the state.

This also explains the postcode lottery, where some hospitals (apparently) can provide Kremlin clinic standards, whilst many other hospitals resemble MRSA infested cesspits of pebble-dashed, post-war brutalist architecture. The NHS’s futuristic IT project is a categorical failure, having wasted more than £2.7 billion of taxpayers’ money. Moreover, the NHS’s rebuilding projects (using PFI money) may become obsolete through overcapacity, as recently revealed.

From 1999 to 2004, the government doubled GPs' pay . The Sunday Times reported that after a three-year contract (2004 - 2007) increasing pay by 25%, GPs worked 15% less and 33% worked part-time.

These oft’ repeated arguments don’t include the massive oversupplies of Tamiflu (based on public hysteria rather than medical evidence), or the inability to clean hospitals (as shown by MRSA outbreaks), or declining standards in nursing and elderly care, or even the extent to which unnecessary procedures are funded by the taxpayer...

It’s pretty clear that the NHS is failing. It’s funded by a damaging taxes on work and operated according to centrally determined targets. There’s no reason why the UK can’t have privately run hospitals funded by a truly competitive insurance market. It would almost certainly deliver a more efficient and comprehensive health system, and it needn’t challenge the universal access that so many people value. It's the ends that matter, not the means.

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A Swiss miss on taxes

Written by Daniel Pycock | Thursday 01 September 2011

Question: What are the greatest threats to individual liberties, and hence prosperity? Answer: Government-protected monopolies and cartels. And government cartels are the worst. OPEC hasn't been good for consumers – when governments get together it's usually to rip off their citizens.

The Anglo-Swiss Tax Agreement threatens to create another government cartel. This is a very dangerous precedent. There’ll soon be no corner of the world where the assets of British citizens are safe from the tentacles of HMRC.

Natural tax competition incentivises governments to keep taxes as low, and hence individuals as free, as possible. If tax rates exceed those citizens are willing to tolerate, then increased evasion, avoidance and emigration will drive taxes down. Emigration is a key point here. Giving people a way out of an oppressive tax regime keeps governments accountable, and puts some ceiling on taxes. Competition works.

Furthermore, tax competition protects the world’s capital flows from government hands and disperses capital amongst enterprising individuals who – when all is said and done – grow the economy, create jobs and increase tax revenues. Taxing capital gains is a form of double-taxation, and is a direct tax on investment. We need more investment right now, not less.

Once the agreement is implemented, enterprising individuals will emigrate further away from Britain and just move their assets elsewhere. 34% of capital squirreled away in Swiss accounts looks attractive, especially when £125bn apparently awaits taxation. But the fact is that Switzerland only starts handing over the cash by 2013, by which time many will have already transferred his or her money to Singapore. It’s an anti-growth, unenforceable agreement. What is the point?

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Africa needs our help – not our aid

Written by Daniel Pycock | Friday 26 August 2011

famineBritain’s international aid budget costs the equivalent of 22 days of national borrowing from international markets. By 2015, British Aid will have increased by 34.2% to £11.5 billion per annum. Including personal donations and state spending, Britain gives 0.8% of GDP in international aid. With state aid increasing, more people should ask: Why are average per capita incomes in Africa lower than 40 years ago after $1 trillion of aid being given over that period?

Aid infrastructure is somewhat responsible. British charities usually attempt to limit net administration costs to 10% (though they often exceed these targets). Reports from the World Bank and ActionAid respectively estimate that 40%-60% of international aid budgets are spent on consultants. Government bureaucracy diverts 5% of British, and 8.7% of European aid budgets respectively.

Most historical evidence shows that developing world aid recipients are more debt-laden, inflation-prone and likely to experience conflict and corruption. In Afghanistan, DfID was forced to stop aid-money after US intelligence found that £1 billion went missing through institutionalised corruption. Malawi’s president, the recipient of £93 million of direct aid, recently ordered an £8 million presidential jet.

President Kagame, recipient of £83 million of direct aid, recently purchased presidential jets worth £60 million. International aid has also contributed to Rwanda’s conflict with neighbouring Congo (in which 5 million people were killed) and prolonged Rwanda’s genocide. When $1.5 billion was donated to deal with a cholera epidemic in Rwanda, Hutu militias stole 60% to fund their crimes.

The Horn of Africa crisis owes some origins to international aid. In 1980s Ethiopia, £90 million of aid was used to lure starving villagers into state camps, from where 600,000 were deported and at least 100,000 died. Using British and Russian aid, Somalia embarked upon a territorial conflict with Ethiopia, which neither nation could afford. Today, warlords rule most of Somalia, expropriating up to 80% of aid that goes there.

The great paradox of international aid is that resources meant to alleviate humanitarian suffering often perpetuate it. Western living standards can only be exported through free trade and more open migration laws.

Free trade gives poorer countries a competitive advantage to exploit, so they can trade their way to prosperity. Instead of giving dictators money to disperse, enterprising citizens earn the money themselves. Governments can still rob their people, but have to allow at least some commerce to take place to do so.

As Sam has argued, more open immigration rules in the West would allow developing nations’ inhabitants to learn from and experience Western market practices. Along with their earnings, they can return these ideas back to their home countries (where trading opportunities would encourage growth). Meanwhile, Western nations would benefit from better growth and higher tax revenues. Peaceful economic exchange would be a lot better for everyone than paying warlords and dictators to oppress their own people.

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Confessions of a former drugs prohibitionist

Written by Daniel Pycock | Tuesday 16 August 2011

drugsThe drug legalization debate plays on my heartstrings. I’ve witnessed family and friends ruin their lives through drugs. Some have died from overdoses, while ‘luckier’ friends have been imprisoned. I’ve watched perfectly intelligent friends lose their character. Believe me when I say that I know what drugs do – especially to family life and cherished friendships.

Accordingly, my position on drugs was familiar: the Peter Hitchens position. I shall not try to paraphrase him – you can read his arguments here. But to summarize, my previous views were that drugs are bad so they should be illegal. The drug industry should have harsh-sentences imposed on them when caught.

A conversation with a Dutch friend reinforced this. He said that “the reason that drug legalization worked in Holland was because if you take drugs, you’re still seen as an idiot” (or worse). The United Kingdom’s culture just isn’t accustomed to stigma or peer-pressure (as a means of enforcing a common law morality) any more.

Yet this flawed thinking pervades our tax system. The reason for punitive tax rates is not ‘revenue maximization’. Evidence shows that punitive tax-rates are counter-productive (creating tax avoidance, emigration and the like). The motivation for measures such as the 50p tax rate is not economic, but moralistic. And yet this fallacy still informs people who are committed capitalists and free-marketeers. Not even Milton Friedman could entirely convince me. What are the logical effects of criminalization?

The legalization of cannabis in particular has proven controversial. Opponents see a thin-end of the wedge. More people trying drugs going on to harder drugs; legalizing one substance making the criminalization of other substances less tenable. Cannabis is the easiest drug to intercept. But what does stopping cannabis do? It compels people to supply and demand harder drugs.

Cannabis suppliers are incentivized to grow more potent marijuana. Cheaper, harder drugs will experience demand booms. The first time I was offered drugs was outside of my school's gates by a drug-dealer offering me cheap cocaine. And there are incentives for even more dangerous innovations. As Friedman says: “Crack cocaine would never have been invented… if cocaine had not been so expensive”. I would echo this argument for crystal meth. With harder drugs and the information failure involved in an illegal market, what guarantees of quality are there?

The foremost effect of criminalizing drugs is to protect the criminal gangs that traffic them. The barriers to entry in the drugs market are high and infinitely risky, whilst policing protects the price of their produce. Gang culture would not be financially viable if artificially inflated prices didn’t protect their profits. Prohibition Era USA banned alcohol, yet easy access remained. When alcohol is consumed in large quantities, people do stupid, unattractive things that we may disapprove of. But is that better or worse than keeping Al Capone in business?

Gang culture disproportionately affects and criminalizes the inhabitants of high-density populations in inner cities. By keeping prices artificially high combined with finite incomes funding an infinite desire to acquire drugs, governments are indirectly causing more crimes to be committed. Again, Friedman calculates that 10,000 additional people were killed in the USA through drug-related homicides and gang-warfare. Is it not a moral problem that government intervention over personal-choices is essentially killing thousands of innocent people?

A reasonable concern remaining is the potential increase in people either trying or becoming addicted to drugs. Rachel has already pointed out that addicts are dealt with by police officers and judges rather than health and rehabilitation services. But I think there’s a wider philosophical point: Addicts make their own individual choices. It is their choice to seek help or reap the consequences of drug-addiction. Why, at everyone else’s expense, should addicts be protected from their own selfishness?

If, as prevailing opinion dictates, over one’s own body the individual is sovereign, then criminalizing a drug addict over a personal choice that doesn’t affect anyone else is immoral and paternalistic. Moreover, why should taxpayers guarantee the costs of intervening in something that they’re not responsible for? Encouraging drug-addicted parasitism, leeching off of the taxpayer is at least as immoral as when the welfare state actively encourages long-term unemployment. Prohibition is at the root of many social evils: we should start looking at the trees to see the forest for what it is.

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The ECB fiddles while Europe burns

Written by Daniel Pycock | Wednesday 10 August 2011

For a situation deriving from a multiplicity of complex causes – the expropriation of monetary policy from national governments, the consequences of the credit crunch, the ill advised bailouts of banks and nations, the accumulation of debt during an economic boom, etc – the Eurozone crisis has a remarkably simple solution: allow the weaker, debt-laden economies to escape the monetary union, regain control of their monetary policy and devalue their way back into the marketplace.

Greece, Ireland and Portugal – despite the insistence of European ‘leaders’ that such bailouts wouldn’t be necessary – have been bailed out to the tune of €300billion. The European Taxpayers’ exposure to Greece is €106billion. Ireland’s bailout has cost €90billion and Portugal’s €78billion. Cyprus’ bond yields maturing in 2014 are trading at 10.18%, with a debt rating descending through the junk statuses (from CC to CCC) – presumably they’re next.

The initial reaction of the European Central Bank (along with the Bank of England and the Federal Reserve) was increasing money supply through quantitative easing (QE). The prolonged policy (in conjunction with low interest rates) caused the development of an addiction to cheap money and inflation. As a result of QE, the ECB resembled the mint of a Western Roman Usurper, or that of a Third Century Roman Emperor, hopelessly debasing coinage to avoid the inevitable.

The latest policy, which is a forerunner to the European Financial Stability Fund (EFSF), sees the European Central Bank buying up bonds to prevent the crisis metastasising and spreading to Spain and Italy. The short-term consequences have been to decrease the current bond yields of each country (Italy’s bonds are trading at 5.58% – down 0.58 & Spain’s bonds are trading at 5.58% as well, down 0.68). It is little more than a temporary reprieve however, from the risks posed by two nations that between them possess €6.3trillion of public and private debt.

The most immediate concern therefore is not Cypriot exposure to Greek financial turmoil, but French exposure to Spanish and Italian debt (€472bn of Italian debt and €175bn of Spanish debt). What is the European Central Bank doing? Nothing, really, except to delay the inevitable. It can artificially inflate bond yields for a while – maybe – but the idea that the ECB can intervene in Italy’s €1.8tn (120%GDP) public debt bond market is, as Peter Oborne has commented, a joke. The EFSF – even if successful – will require an extra €2tn.

Fitch, Standard & Poor’s and Moody’s don’t evaluate central banks (such is the unprecedented, ultra vires nature of ECB intervention) but if they did; the European Central Bank would be beyond junk status, with a vastly overvalued portfolio and questionable accounting methods. To whom is this body accountable? What will the eventual cost be for this truly Faustian debt? Europe needs leadership. Once again, all we get is panem et circenses.

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